Online art auctions take hit from economy

Catherine McCormack-Skiba and her husband had to find new ways to sell the art work on the Web site they debuted at Art Basel Miami Beach late last year when sales suffered because of the recession.

They are now offering more art for lower prices on kartexchange.com, the site they launched in December.

"We get an awful lot of people looking ... but not a lot are clicking and whipping out the Mastercard at the moment," Brian Skiba says.

Online sites selling art are facing a similar situation to auction houses: Sales are down. These sites vary in the quality of art they sell. Some of them are standalone and some are operated by galleries as an additional way to reach buyers. Some owners say they are losing money, while others said their businesses haven't grown as much as they had hoped since the economic downturn. They are all looking at alternative ways to keep their businesses going in this declining market.

Palo Alto, Calif.-based McCormack-Skiba said people are buying the cheaper art on the site. No one is buying the more expensive works on the site that run from $5,000 to $10,000.

So, to readjust their strategy they are offering more art at lower prices. They are increasing the number of prints of each artist they represent on their Web site.

"Clearly the economy dictates a large part of what you can do in the next year," he said. "I don't think we are impervious to it. We benefit from the fact that we are still small. I don't know a single business ... that's not impacted by the economy."

They are also trying alternative ways of distributing art, such as their new venture called "Expresso Gallery," where they have arranged to load photographs of art work on projectors placed in coffee shops in major U.S. cities to view and order.

Bill Fine faced a similar situation as McCormack-Skiba. He said that last year he launched the auction section of his online site, artnet.com. Works are put up for auction and the site gets a 10 percent commission from the buyer and the same amount from the seller. He said he is oing an average of $400,000 to $500,000 in sales per month, but is losing money monthly. But he has faith in his venture.

"We think this is the future of the business here," Fine said. "I think there are probably fewer people in the market. I think they are looking for value. I think there is a certain reticence in the million dollar range."

His site also hosts 2,300 galleries from throughout the world. So, all a client has to do is type in the name of the artist he or she wants to find and a catalog of works will pop up.

Monica Herman, director of the Mixed Greens gallery and its art sales Web site in New York City, said people aren't making the big splurges, but they are still buying.

"People are being more particular about what they are buying," she said. "Clients are asking for discounts more aggressively than we are used to."

But Herman said there always have been payment plans for buyersat the gallery.

Yet, another online venture called 20 x 200 by Jen Bekman - which are lower-priced limited edition prints and photographs - has actually taken off. Bekman, who also owns an eponymous gallery in New York City, said its probably because of the prices and high quality. But the economy has slowed the pace at which she hoped the project would grow.

"Business is increasing. We will probably make twice as muchrevenue as last year," she said.

Carolyn Meyer, associate director of the School of Painting at the Academy of Art University in San Francisco, said artists are also being affected by the slow sales. Graduates are seeking teaching jobs because of the downturn in sales. She said her own work, which sells online and at a gallery, was also down 50 percent from last year, even though 2008 sales were her best ever. Her oil and canvas paintings go from $1,300 to $10,000.

Ebay, which has an antiques and art section, would not comment on whether sales have been affected by the economy, but the company did give a comparison for the value of all items sold within the category. For the first quarter of 2008 the combined category made $1.5 billion for the first quarter of 2009 it was just over $1 billion - a one-third decline.

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